Job Report Comes in Strong

Stocks responded positively to a promising jobs report this morning before ticking back down. The BLS reported a near 1.4M job jump as well as a decline in unemployment to about 8%.

Next week we will be getting number on inflation which could have big ripples throughout the market. Similar to when the Fed announced they were going to allow inflation to increase, we could see an increase in mortgage rates if the report reflects inflation growth. Like we went over on Wednesday, a likely driver of this inflation will be the pandemic induced bottlenecked supply chains.

There’s good news in the mortgage world today. Mortgages in bailout are down 147k or 4% since last week according to Black Knight. However, 3.8 million loans are still in forbearance – down 1 million from its peak.

Mortgage backed securities are down about 9 bps this morning; likely due to the promising jobs report. They dropped toward their 25 day moving average this morning but have moved a bit higher since their low point. We are holding a locking bias because of the room they have to fall if they continue to test their 25 day moving average.